MGM awaits new partner

Bids from future partners due today

MGM’s murky future should come into sharper focus today, two days after the struggling studio mounted what may be its last hurrah with the preem of “Hot Tub Time Machine.”

With binding offers due today, MGM’s St. Patrick’s Day screening at the Hollywood ArcLight and the after-party at the Cabana Club could wind up being the Lion’s final public outing as a stand-alone studio. It was the first MGM premiere since September when “Fame” preemed at the Grove and only the second since late 2008, when “Valkyrie” screened at DGA headquarters. And “Tub,” which opens March 26, will be the last MGM pic to launch until “The Zookeeper” opens Oct. 8.

Wednesday’s event unveiling the $35 million comedy was a light-hearted affair with little chatter among the hundreds of guests about the ultimate fate of MGM, which put itself up for sale four months ago. Studio president Mary Parent and VPs Cale Boyter and Luke Ryan mingled along with Stephen Cooper, the corporate turnaround specialist who came on board as Lion chairman last summer.

Debt-laden MGM invited a half-dozen suitors last month to participate in a second round of bidding, which included allowing those that qualified to pore over MGM’s internal financials. Though no one has announced a formal bid, the most likely candidates are Time Warner, Lionsgate and Len Blavatnik’s Access Industries.

People close to the situation believe Access has indicated it is willing to make an offer of as much as $2 billion. Lionsgate’s offer is pegged in a range between $1.4 billion and $1.8 billion while Time Warner’s offer is expected to be in the $1.5 billion range. Potential bids by John Malone’s Liberty Media and Ryan Kavanaugh’s Relativity Media with hedge fund Elliott Management aren’t expected to materialize.

Each bid contains unique challenges. Access would establish itself as a showbiz player but would likely sell off MGM’s rights to the James Bond and “Hobbit” franchises. Time Warner, sitting on a wad of $5 billion in cash from the recent spinoff of its cable systems, would be able to fully exploit Bond and “Hobbit” (which it is already co-producing through New Line) but probably has little use for the 4,000-title library. Lionsgate, which has historically grown partly through library acquisitions, isn’t set up to do tentpoles such as the Bond movies and would likely seek a partner or sell off the franchises.

The submission of binding bids means that MGM will meet within the next week or so with its debtholders to sort out what to do next. Possibilities include picking one of the offers, starting a third round of bidding or going the route of recapitalizing. A recapitalization bid could bring investment bank Qualia Capital or News Corp. into the picture.

Qualia, operated by former Artisan exec Ken Shapiro and Amir Malin, is believed to have proposed a combination of a cash infusion and a debt-to-equity transaction that would allow MGM to remain in business with its existing management. The Lion has said that one of its options for dealing with its crushing $3.7 billion debt load is to find a partner or remain a stand-alone entity.

It’s uncertain if the numbers being bandied about as the price for MGM assets — which include MGM and United Artists names and logos and MGM’s TV operations — will be high enough to meet expectations of the 140 MGM debt holders. And since MGM’s privately held, there’s no specific sale deadline as long as the debt holders go along.

Since Cooper came on board, the debt holders have agreed three times to extend the debt payments, with the most recent extension going to March 31. MGM’s facing repayment of its $250 million revolving credit line in early April and a $1 billion payment on its $3.7 billion debt in July 2011.

The only pics in Leo’s pipeline after “Hot Tub Time Machine” and “The Zookeeper” are a “Red Dawn” remake in November and a 3D “Cabin in the Woods” in January.